The first reason for supporting FAT32 (and FAT16) was that a FAT partition is required for booting with UEFI. Therefore, it was convienent at the time to store there also all the rest of the "initrd" files (init, busybox etc.). After the boot, ramfs is mounted at root, while the FAT32 boot partition is mounted at /initrd. Part of the FAT32 code in the kernel is reused by the legacy bootloader in order to read the kernel file from the boot partition. Today, the "initrd" files are NOT stored anymore in the boot partition; there are two separate FAT partitions instead: bootpart, a small partition containing just the kernel file and the EFI bootloaders, and fatpart, a slightly bigger partition (depending on the configration) containing the initial ramdisk files (e.g. busybox) instead. After the boot, fatpart remains mounted at /initrd, while none of the contents of bootpart are kept.